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The Bush tax cuts: Who benefits?

Marc Thiessen points out that the Bush tax cuts for low- and middle-income households—which once were derided by Congressional Democrats as a pittance compared to the cuts for high-earners—are now portrayed as essential to the well-being of the middle class. You will be shocked to hear that the press has played along as well.

For instance, a Dec. 24 Wall Street Journal article declared that “If the U.S. goes over the ‘fiscal cliff,’ some Americans may fall harder than others:”

The biggest impact in sheer dollars would land on relatively affluent households, particularly when it comes to the tax increases that make up the bulk of the cliff. But in terms of percentage of tax increases, low- and moderate-income taxpayers will face the biggest burden—an often overlooked part of the budget debate that’s now getting attention as the year-end deadline nears.

This is precisely the opposite of what we heard as the 2001 income tax cuts were debated. At the time, Republicans pointed out that while high earners would receive the largest tax cuts in dollar terms—which is almost inevitable given that high earners pay such a large share of total income taxes—the largest percentage cuts in income taxes went to low and middle-income households.

That argument was ignored by Congressional Democrats and the press in favor of coverage of the sheer dollar amounts high earners would receive through the Bush tax cuts. For instance, the Center on Budget and Policy Priorities pointed out in 2004 that “The top one percent of households will receive tax cuts averaging almost $35,000 — or 54 times as much as that received on average by those in the middle of the income spectrum.”

Discussion: (2 comments)

“This is precisely the opposite of what we heard as the 2001 income tax cuts were debated. At the time, Republicans pointed out that while high earners would receive the largest tax cuts in dollar terms—which is almost inevitable given that high earners pay such a large share of total income taxes—the largest percentage cuts in income taxes went to low and middle-income households.”

Correct, sir. Someone making $50,000 got a few grand, while someone making $750,000 got tens of thousands.